Reyes v. Bakery and Confectionery Union and Industry International Pension Fund
Filing
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ORDER GRANTING FINAL APPROVAL AND GRANTING IN PART AND DENYING IN PART PLAINTIFFS MOTION FOR ATTORNEYS' FEES by Judge Jon S. Tigar granting 132 Motion for Settlement; granting in part and denying in part 134 Motion for Attorney Fees. (wsn, COURT STAFF) (Filed on 12/28/2017)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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JUAN M. REYES, et al.,
Plaintiffs,
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v.
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United States District Court
Northern District of California
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Case No. 14-cv-05596-JST
BAKERY AND CONFECTIONERY
UNION AND INDUSTRY
INTERNATIONAL PENSION FUND, et al.,
ORDER GRANTING FINAL
APPROVAL AND GRANTING IN PART
AND DENYING IN PART PLAINTIFFS’
MOTION FOR ATTORNEYS’ FEES
Re: ECF Nos. 132, 134
Defendants.
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Before the Court are Plaintiffs’ unopposed motion for final approval of the class action
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settlement, ECF No. 132, and Plaintiffs’ opposed motion for attorneys’ fees, costs, and incentive
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awards, ECF No. 134. The Court granted preliminary approval of the settlement on April 12,
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2017, and held a fairness hearing on September 28, 2017. ECF Nos. 131, 158. The Court will
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grant the motion for final approval and grant in part and deny in part Plaintiffs’ motion for
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attorneys’ fees, costs, and incentive awards.
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I.
BACKGROUND
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A.
The Parties and Claims
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Plaintiffs, participants in the Bakery and Confectionery Union and Industry International
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Pension Fund (the “Fund”), brought this action on behalf of themselves and similarly situated
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participants pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C.
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§§ 1001 et seq. (“ERISA”). ECF No. 93 ¶ 1 (second amended complaint). Plaintiffs allege that
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Defendants ‒ the Fund and its trustees ‒ failed to comply with the requirements of ERISA and the
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Pension Protection Act of 2006 (“PPA”) in adopting an amendment to the pension plan. Id.
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The Fund is a multi-employer defined benefit pension plan that covers tens of thousands of
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participants and beneficiaries throughout the United States. Id. ¶¶ 24-25. Under the terms of the
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Fund, certain employers offered participants subsidized early retirement plans known as “Plan G”
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(the “Golden 80 Plan”) and “Plan C” (the “Golden 90 Plan”). Id. ¶ 28. Under the Golden 80 Plan,
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when a participant’s age and service, in years and months, equal 80 years, the participant is
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entitled to retire at the full benefit level, except that participants who entered the plan after
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December 3, 1998, must have a minimum number of years of service. Id. Similarly, under the
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Golden 90 Plan, when a participant’s age and service, in years and months, equal 90 years, the
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participant is entitled to retire at the full benefit level, except that participants who commenced
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participation after December 3, 1998, must have a minimum number of years of service. Id.
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Before July 2010, participants who retired before normal retirement age without the
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Northern District of California
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required 80 or 90 years of combined age and service could “age into” the benefit. Id. ¶ 30. In
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other words, such a participant would begin receiving full retirement benefits when his or her
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years of combined age and service reached the required number, without returning to work in
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covered employment. Id. Similarly, when a participant died before reaching the necessary 80 or
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90 years of combined age and service, the surviving spouse could receive the normal retirement
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age pension when the participant spouse would have “aged into” the benefit. Id. ¶ 31.
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In July 2010, the Fund’s trustees amended the Fund to eliminate the option to age into
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these benefits. Id. ¶ 32. The 2010 Amendment required that a participant be employed with a
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participating employer at the time he or she qualified for Golden 80 or 90 benefits. Id. Lawsuits
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challenging this amendment were consolidated in the Southern District of New York. Id. ¶ 34.
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While this litigation was ongoing, Defendants distributed a “Notice of Critical Status,” dated
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April 27, 2012, announcing that subsidized early retirement benefits such as the Golden 80 and
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Golden 90 Plans might be reduced or eliminated as part of a rehabilitation plan. Id. ¶¶ 52-54. In
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the Rehabilitation Plan, dated November 7, 2012, the trustees adopted an amendment, effective
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April 30, 2012, “as a contingent measure because of the pending court challenge to the earlier
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amendment.” Id. ¶¶ 58-59. This 2012 Amendment was identical to the 2010 Amendment. Id.
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¶ 59. In May 2014, the Second Circuit affirmed the district court’s decision to strike the 2010
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Amendment, and the 2012 Amendment went into effect. Id. ¶ 63.
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Plaintiffs allege that the 2012 Amendment is “void for illegality under ERISA because it
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has neither been enacted nor effectuated in compliance with ERISA’s provisions, including the
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provisions of the PPA which create a narrow exception to ERISA’s anti-cutback scheme.” Id. ¶ 1.
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More specifically, Plaintiffs assert that the 2012 Amendment is null and void because it illegally
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reduced or eliminated benefits without the Fund having first provided proper notice under ERISA
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§ 305(e)(8)(C), or, in the alternative, because (1) the Fund failed to provide adequate information
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to the actuary “regarding projections of industry activity, including future employment and
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contribution levels,” and (2) the trustees “breached their fiduciary duty by failing to monitor and
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oversee adequately the actions of the actuary who certified the Fund to be in critical status before
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taking action upon that certification.” Id.
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Northern District of California
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On April 26, 2016, the Fund adopted another amendment, effective June 1, 2016, which
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again eliminated the ability of certain plan participants to age into the Golden 80 and Golden 90
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benefits. ECF No. 118 at 10. The 2016 Amendment is not at issue in this case.
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B.
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Plaintiffs moved for class certification on July 23, 2015. ECF No. 64. On September 22,
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Procedural Background
2015, the Court granted Plaintiffs’ motion and certified the following Rule 23(b)(1)(A) class:
All participants in the Bakery and Confectionery Union and Industry
International Pension Fund or, if deceased, their beneficiaries or
Estates, who
(i)
accrued (a) years of Covered Employment credits and
(b) age credits towards eligibility for pension benefits under
Plan C (also known as the “Golden 90”) or Plan G (also
known as “Golden 80”), and
(ii)
who would be eligible for Plan C or Plan G benefits except
that their age and years of service first totaled 80 (with
respect to Plan G eligibility) or 90 (with respect to Plan C
eligibility) on or after May 1, 2012, at a time when they were
not working in covered employment.
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ECF No. 72 at 8. Two days later, Defendants moved for judgment on the pleadings. ECF No. 73.
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The Court denied the motion as to Count I (Improper Notice), granted the motion as to the
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remaining counts, and gave Plaintiffs leave to amend Count II (Improper Certification of Fund).
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ECF No. 89 at 12. On April 5, 2016, Plaintiffs filed a second amended complaint. ECF No. 93.
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The case settled before Defendants responded to Plaintiffs’ amended claims.
Plaintiffs moved for preliminary approval of the class action settlement on December 20,
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2016. ECF No. 118. The Court denied preliminary approval on January 11, 2017, noting a
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problematic reversion clause and several issues with the proposed class notice. ECF No. 123.
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After the parties’ revised the settlement agreement, Plaintiffs submitted a renewed motion for
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preliminary approval, ECF No. 126, which the Court granted on April 12, 2017, ECF No. 131.
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The Court held a final fairness hearing on September 28, 2017. ECF No. 158. As ordered by the
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Court, class counsel filed a supplemental report concerning the claims process and documentation
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of claimed costs on November 9, 2017. ECF No. 164. Defendants oppose Plaintiffs’ valuation of
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the common fund for purposes of calculating a percentage fee award. ECF No. 170.
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Northern District of California
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C.
Terms of the Settlement
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The settlement agreement provides for both injunctive and monetary relief. First,
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“Defendants agree to the entry of a permanent injunction . . . which enjoins the Pension Fund from
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enforcing the 2012 Amendment with respect to Prospective Claims, and further enjoins the Fund
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from applying the 2012 Amendment to Retroactive Claims in a manner inconsistent with the
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Claims Procedures set forth in the Settlement Agreement.” ECF No. 125 at 20.1 The injunction
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does not affect the 2016 Amendment. Id. at 21.
The settlement also provides for monetary relief to certain class members. Specifically,
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the Fund will pay class members “who, but for the 2012 Amendment’s prohibiting the Class
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Member from aging into the benefit, . . . would have been eligible for a Golden 80 or 90 benefit
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with a Pension Effective Date falling within the Payment Period [May 1, 2012, through May 31,
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2016].” Id. at 8. Each class member’s payment is calculated as follows:
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The calculation of the Payment Period Settlement Amount for each
Class Member is to first take the amount of Golden 80 or 90 benefits
that would have been payable to the Class Member during the
Payment Period but for the 2012 Amendment (“the Initial Benefit
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“Prospective Claims” are “any claim or application filed by or on behalf of a participant or
beneficiary for a Golden 80 or 90 benefit with a Pension Effective Date on or after June 1, 2016.”
“Retroactive Claims” are “any claim or application filed by or on behalf of a participant or
beneficiary for a Golden 80 or 90 benefit with a Pension Effective Date after April 30, 2012 and
on or before May 31, 2016.” ECF No. 125 at 12-13.
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Amount”), then deduct the amount of benefits that the Class
Member actually received from the Pension Fund during the
Payment Period and then to multiply the difference by thirty-seven
percent (37%). This amount will then be reduced by the Class
Member’s Proportional Administrative Expenses described in
Section 6.7.
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Id. at 30.
The administrative process differs based on whether the class member did or did not
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receive a pension during the Payment Period. “Class Members in Pay Status,” who received a
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pension during the Payment Period, do not need to fill out an application form to receive their
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payments. Id. at 28-29. Class members who did not receive a pension during the Payment Period
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must submit an application form to receive payment under the Settlement. Id. Application forms
will be sent with the class notice to “Probable Payees,” whom the Fund believes are likely to
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Northern District of California
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qualify for monetary relief based on review of its records, as well as those “whom the Fund
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identifies . . . as having been within two years of qualifying as a Probable Payee.” Id. at 12, 22.
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At the time of preliminary approval, Plaintiffs estimated that Class Members in Pay Status would
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be guaranteed to receive $6,013,000, while $6,204,000 would be available to Probable Payees, for
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a total potential settlement amount of $12,217,000. ECF No. 118 at 13. The parties subsequently
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filed a stipulation that the total settlement amount is $10,225,006.20.2 ECF No. 174 at 2.
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Payments to both groups will be reduced by the amount of any attorneys’ fees, expenses, and
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incentive awards authorized by the Court to be paid out of the settlement fund. ECF No. 125 at
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32. The settlement provides for an administrative remedy process to resolve disputes that includes
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a right to motions practice with this Court. Id. at 33-35.
The settlement also requires class members to release the following claims against “all
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Defendants and Trustees, as well as any other Person that at any time between January 1, 2012 and
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June 1, 2016 served as a named or functional fiduciary of the Pension Fund or as a Representative
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of any Defendant or Trustee”:
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The final amount of the settlement fund may increase slightly. As the parties explain: “Because
the settlement provides an administrative appeals process to class members who had their timely
applications denied, additional funding may occur, subject to the terms of the Stipulation of
Settlement, if any pending appeals are resolved in favor of the class members. If such additional
funding occurs, the parties shall so inform the Court.” ECF No. 174 at 2.
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[A]ny and all actual or potential, known or unknown, claims
(including but not limited to claims to the Pension Fund for benefits,
as well as claims for attorneys’ fees, expenses and costs), actions,
damages, losses, causes of action, demands, obligations, and
liabilities arising out of, or related to, the transactions or occurrences
asserted in Plaintiffs’ Original Class Action Complaint, Plaintiffs’
First Amended Class Action Complaint, or Plaintiffs’ Second
Amended Class Action Complaint in the Action, including but not
limited to (i) the determination that the Pension Fund was in critical
status under ERISA Section 305 in the plan year 2012; (ii) plan
amendments adopted in the 2012 Rehabilitation Plan affecting
Golden 80 or Golden 90 benefits; and (iii) notice of such plan
amendments; except that Released Claims do not include: (a) any
rights or duties arising out of this Settlement Agreement, including
the express warranties and covenants in this Settlement Agreement;
(b) any right of Class Plaintiffs to apply for a class representative fee
award and on Class Counsel’s behalf for an award of attorneys’ fees
and expenses in the Action as set forth in Section 8; (c) any ERISA
Section 502(a)(1)(B) claim for vested benefits by any Plan
participant or beneficiary pursuant to the Plan Rules where such
claims are unrelated to any matter asserted in this Action; and
(d) any potential claims arising out of the 2016 Amendment and/or
the 2016 Notice of Critical Status where such claims do not
challenge the validity of the determination that the Pension Fund
was in critical status under ERISA Section 305 in the plan year 2012
or the validity of plan amendments adopted in the 2012
Rehabilitation Plan affecting Golden 80 or Golden 90 benefits. With
respect to Class Members other than the Class Representatives, in no
event will the scope of the Released Claims be broader than the res
judicata effect of a final judgment in this Action.
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Northern District of California
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Id. at 16-17.
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II.
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FINAL APPROVAL OF SETTLEMENT AGREEMENT
“The claims, issues, or defenses of a certified class may be settled . . . only with the court’s
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approval.” Fed. R. Civ. P. 23(e). “Adequate notice is critical to court approval of a class
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settlement under Rule 23(e).” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). In
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addition, Rule 23(e) “requires the district court to determine whether a proposed settlement is
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fundamentally fair, adequate, and reasonable.” Id. at 1026. To assess a settlement proposal, the
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district court must balance a number of factors:
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(1) the strength of the plaintiffs’ case; (2) the risk, expense,
complexity, and likely duration of further litigation; (3) the risk of
maintaining class action status throughout the trial; (4) the amount
offered in settlement; (5) the extent of discovery completed and the
stage of the proceedings; (6) the experience and views of counsel;
(7) the presence of a governmental participant; and (8) the reaction
of the class members to the proposed settlement.
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Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004). There is no governmental
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participant in this case, so the Court need not consider that factor.
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A.
Adequacy of Notice
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“The class must be notified of a proposed settlement in a manner that does not
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systematically leave any group without notice.” Officers for Justice v. Civil Serv. Comm’n of
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City & Cty. of San Francisco, 688 F.2d 615, 624 (9th Cir. 1982) (citation omitted).
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The Court approved the parties’ proposed notice procedures, ECF No. 131 at 2, after the
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parties corrected deficiencies previously identified by the Court, ECF No. 123 at 11-12. Notice
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was carried out substantially in accordance with this plan. ECF No. 132 at 13-14. Strategic Claim
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Services (“SCS”), the settlement administrator, timely mailed the Court-approved notice to 46,150
out of 46,562 class members. ECF No. 132-1 ¶ 4. This list includes 44,046 class members who
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Northern District of California
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were mailed a class notice only; 789 “Class Members In Pay Status” who were mailed a class
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notice with an exemption letter explaining that they did not need to file an application to receive a
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payout;3 and 1,727 “Probable Payee” and “Within Two Years” class members who were mailed
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both a class notice and an application form. Id. Six class members were mailed a late class notice
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and application form after class counsel assisted SCS with locating their addresses. Id. ¶ 5. This
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leaves 406 class members who were not mailed a notice because their addresses could not be
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located, even after “skip tracing the names with social security numbers using Experian.” Id. In
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addition, 2,602 of the class notices were returned as undeliverable. Id. ¶ 10. Of those, 1,569 were
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re-mailed to addresses provided by the United States Postal Service or obtained through skip
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tracing via Experian. Id. Of the re-mailed notices, 87 were returned as undeliverable. Id.
Thus, 1,526 class members, or approximately 3.3% of the class, did not receive a class
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notice by direct mail. These class members received notice only via publication in USA Today on
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May 22, 2017. ECF No. 132-1 ¶ 9. SCS also established a website with the class notice and
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claims information, id. ¶ 8, and “was contacted by 95 individuals requesting Class Notices with
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Application Forms,” ECF No. 156 ¶ 3.
On June 26 and July 13, 2017, SCS sent postcards reminding Probable Payees and Within
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Plaintiffs’ motion for final approval erroneously asserts that 1,124 class members would receive
a payout without needing to file an application. ECF No. 132 at 6.
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Two Years class members to submit their application by the deadline. ECF No. 132-1 ¶ 7. On
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July 31, SCS contacted or attempted to contact the 335 Probable Payees who had not yet filed an
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application.4 Id. To date, they have contacted 278 of these class members and have been unable
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to contact 57. ECF No. 156 ¶ 5. Following these contacts, 172 Probable Payees had not filed an
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application as of August 28, 2017, and SCS provided a list of these class members to class counsel
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so that counsel could attempt to contact them. Id. ¶ 6.
In light of these actions, and the Court’s prior order granting preliminary approval, the
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Court finds the parties have provided adequate notice to the settlement class members.
In addition, Defendants provided the required notice to federal and state attorneys general
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under the Class Action Fairness Act, 28 U.S.C. § 1715(b), on March 13, 2017. ECF No. 143-1
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Northern District of California
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¶ 3. This notice occurred more than 90 days before the date of this order, as required by 28 U.S.C.
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§ 1715(d).
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B.
Fairness, Adequacy, and Reasonableness
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1. Strength of Plaintiffs’ Case; Risk, Expense, Complexity, and Likely
Duration of Further Litigation; and Risk of Maintaining Class
Status Throughout Trial
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Approval of a class settlement is appropriate when “there are significant barriers plaintiffs
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must overcome in making their case.” Chun-Hoon v. McKee Foods Corp., 716 F. Supp. 2d 848,
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851 (N.D. Cal. 2010). Similarly, difficulties and risks in litigating weigh in favor of approving a
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class settlement. See Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 966 (9th Cir. 2009).
This Court has already noted class counsel’s acknowledgment that the Court might narrow
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the scope of relief during the damages phase of the case, as well as counsel’s consideration of the
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financial position of the fund in assessing the value of settlement now. ECF No. 123 at 7-8. The
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Court further observed that, “[w]hile Plaintiffs have already succeeded in obtaining class
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certification, dispositive motions briefing and an eventual trial would surely prolong the wait class
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members face to obtain relief.” Id. at 8. Indeed, Defendants’ response to Plaintiffs’ motion for
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The declaration states that SCS attempted to contact “336 Probable Payees who have not yet
filed an application,” but then breaks that down into 224 contacted class members, 67 class
members with pending contacts, and 44 class members that were unable to be contacted. ECF No.
132-1 ¶ 7. This totals 335 class members.
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final approval makes clear that they would vigorously litigate this case if it did not settle. ECF
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No. 143 at 4-11 (arguing that Counts II and III in the second amended complaint have no merit;
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that Defendants would appeal any judgment based on the legal conclusions in the Court’s order
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denying judgment on the pleadings on Count I; and that full relief on Count I would likely be
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limited, at most, to 7.5 months of benefit payments).
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Although there appears to be little risk that the class could not be maintained throughout
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the trial of this matter, the risks of pursuing the case through to a litigated conclusion are high. In
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addition, any relief to the class would be significantly delayed, putting the likelihood of actual
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recovery in more doubt. See ECF No. 132 at 19 (“Class Counsel also took into account the
financial position of the Fund in determining that a settlement in the near term might be more
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Northern District of California
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beneficial to the Class than holding out for a judgment after trial and appeals that could extend out
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for many years.”). Accordingly, these factors weigh in favor of approving the settlement.
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2. Settlement Amount
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“In assessing the consideration obtained by the class members in a class action settlement,
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‘it is the complete package taken as a whole, rather than the individual component parts, that must
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be examined for overall fairness.” Nat’l Rural Telecomms. Cooperative v. DIRECTV, Inc., 221
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F.R.D. 523, 527 (C.D. Cal. 2004) (quoting Officers for Justice, 688 F.2d at 628). “In this regard,
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it is well-settled law that a proposed settlement may be acceptable even though it amounts to only
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a fraction of the potential recovery that might be available to the class members at trial.” Id.
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(citing Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 1242 (9th Cir. 1998)).
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In this case, class members are scheduled to receive 37% of the pension benefits they
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should have received during the four-year Payment Period had the 2012 Amendment not gone into
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effect, less a pro rata share of attorneys’ fees and expenses. The Court previously calculated the
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expected percentage recovery as being closer to 25% after this deduction, assuming that the Court
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granted counsel’s request for a 33% fee award. ECF No. 123 at 8. The Court found “the question
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of adequacy [of the settlement amount] to be a close one, but particularly because two thirds of the
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class will receive payments on an expedited basis without the need to complete further claims
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paperwork, and in light of the expressed concerns about Defendant’s financial condition, the Court
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conclude[d] that a 25% recovery—or a recovery in that ballpark—is substantively reasonable and
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favors approval.” Id.
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The data provided by the settlement administrator indicates that only approximately one-
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third, and not two-thirds, of class members who are receiving payouts ‒ 789 out of 2,516 ‒ will
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receive a payment without the need to complete a claims form. ECF No. 132-1 ¶ 4. On the other
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hand, as discussed below, the Court will award only a 25% fee award from the common fund, and
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this amount will be offset by statutory fees paid by Defendants, so the overall amount available for
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class member payouts will be greater. The question remains a close one, but the Court concludes
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that the settlement amount is reasonable and favors approval.
3. Extent of Discovery
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Northern District of California
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“In the context of class action settlements, ‘formal discovery is not a necessary ticket to the
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bargaining table’ where the parties have sufficient information to make an informed decision
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about settlement.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 459 (9th Cir. 2000) (citation
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omitted).
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Discovery in this case has included “six separate document productions from the Pension
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Fund and more than thirteen thousand three hundred (13,300) pages of document production.”
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ECF No. 132 at 19. The case also “involved the use of an expert to provide opinions on the nature
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of the Pension Fund’s defense to the Class Members’ claims.” Id. Discovery extended through
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mediation and “for nearly six months thereafter as settlement terms were discussed.” Id. at 19-20.
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As this Court previously concluded, this discovery process was sufficient to allow the parties to
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make an informed settlement decision. ECF No. 123 at 9. This factor therefore weighs in favor of
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approval.
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4. Counsel’s Experience
Plaintiffs’ counsel recommend that the Court approve the settlement. “The
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recommendations of plaintiffs’ counsel should be given a presumption of reasonableness.” In re
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Omnivision Techs., Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008) (citation omitted). Counsel
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for both sides have substantial ERISA experience, and the settlement was reached after a full day
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of mediation with a JAMS mediator. ECF No. 132 at 16-17. This factor weighs in favor of
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approval.5
5. Reaction of the Class
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Finally, class members’ positive reaction to a settlement weighs in favor of settlement
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approval. “[T]he absence of a large number of objections to a proposed class action settlement
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raises a strong presumption that the terms of a proposed class settlement action are favorable to the
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class members.” In re Omnivision, 559 F. Supp. 2d at 1043 (citation omitted).
In this case, the Court received and filed correspondence from eleven class members.6
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ECF Nos. 135, 136, 140, 141, 142, 146, 154, 155, 161, 172, 176. The Court forwarded two other
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letters to class counsel. ECF Nos. 152-1, 152-2. Two class members withdrew their objections
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after class counsel worked with them to resolve their concerns. ECF No. 150 (withdrawing ECF
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Northern District of California
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No. 141); ECF No. 163 (withdrawing ECF No. 154). A third class member withdrew her
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correspondence, which was an appeal to the settlement administrator that was inadvertently sent to
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the Court. ECF No. 180 (withdrawing ECF No. 176). Ten letters remain for the Court to address.
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One of the remaining letters raises concerns about a disability pension and does not
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concern the benefits at issue in this case. ECF No. 152-2. Two other letters also do not concern
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the settlement in this case and instead complain that the Fund has miscalculated their years of
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service. ECF Nos. 135, 161.
The remaining seven letters are properly construed as objections. This represents 0.015%
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of class members and 0.28% of class members receiving monetary relief under the settlement.
One objection misunderstood the class payout calculations. ECF No. 152-1. The objector
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incorrectly believed that he would “get as little as 5% of what I am entitled” after attorneys’ fees
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were awarded. Id. at 4. He apparently deducted the 33% potential fee award from the 37%
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The Court considers this factor, as it must, but gives it little weight. “[A]lthough a court might
give weight to the fact that counsel for the class or the defendant favors the settlement, the court
should keep in mind that the lawyers who negotiated the settlement will rarely offer anything less
than a strong, favorable endorsement.” Principles of the Law of Aggregate Litigation § 3.05
cmt. a (Am. Law. Inst. 2010).
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The Court considers all of these letters even though five ‒ ECF Nos. 154, 155, 161, 172, 176 ‒
were filed after the August 31, 2017 deadline to file objections. See ECF No. 131 at 2, 4 (setting
deadline for objections as twenty-eight days before the September 28, 2017 fairness hearing).
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calculated benefit to reach this conclusion. See id. at 3-4. Class counsel attempted to respond to
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the objector, id. at 2, who refused a certified mailing, id. at 1, and did not return any phone
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messages, ECF No. 152 at 3. It is not clear whether this class member would object to the
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settlement if he understood correctly the method used to calculate payments to the class.
Two objections concern the 2016 Amendment that is not at issue in this case. ECF
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Nos. 142, 146. As the Court previously explained, class members remain free to challenge the
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validity of the 2016 Amendment by filing another lawsuit, with or without counsel. ECF No. 151
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at 2.
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The objector who filed ECF No. 146 also filed a further objection, ECF No. 159, and
appeared at the fairness hearing to object to the settlement, ECF No. 158. The further objection
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Northern District of California
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raises similar issues regarding the 2016 Amendment, but it also challenges the adequacy of class
12
notice because it did not indicate that court documents from this or other cases could be obtained
13
via PACER. ECF No. 159 at 7-8. Although this district’s guidelines indicate that reference to
14
PACER should be included in class action settlement notices, the Court does not find this
15
omission to render the class notice inadequate. See United States District Court, Northern District
16
of California, Procedural Guidance for Class Action Settlements,
17
https://cand.uscourts.gov/ClassActionSettlementGuidance (last visited Dec. 15, 2017). Moreover,
18
as the Court confirmed with the objector at the hearing, her primary objection is that she believed
19
the settlement should also have included the 2016 Amendment.
20
Three remaining objections express dissatisfaction with the amount of the settlement,
21
claiming that class members are receiving too little of the amounts to which they believe they are
22
entitled. ECF Nos. 136, 140, 155. The final objection states an intent to “appeal the amount the
23
lawyers will receive” and “appeal on the benefits [of] settlement,” which the Court construes as an
24
objection to the amount of the settlement. ECF No. 172 at 1. The Court acknowledges these
25
objectors’ frustrations but, as discussed above, nonetheless finds the settlement amount to be
26
reasonable given the risks and delay of further litigation.
27
28
On balance, the Court concludes that the reaction of the class weighs in favor of approval.
See, e.g., Churchill Vill., 361 F.3d at 577 (holding that approval of a settlement that received 45
12
1
objections (.05%) and 500 opt-outs (.56%) out of 90,000 class members was proper).
After reviewing all of the required factors, the Court finds the settlement fair, reasonable,
2
3
and adequate, and grants Plaintiffs’ motion for final approval of the settlement.
4
III.
5
ATTORNEYS’ FEES AND COSTS
Class counsel seek attorneys’ fees both under the ERISA fee-shifting statute, 29 U.S.C.
6
§ 1132(g)(1), and as a percentage of the common fund in this case. They do not seek double
7
recovery, and they acknowledge that any statutory fee award paid by Defendants (or the Fund’s
8
insurance policy) “shall constitute a credit to any amount awarded to Class Counsel from the
9
Settlement Fund as a percentage of the common fund.” ECF No. 134 at 11.
10
Relying on out-of-circuit precedent, Defendants argue that a common fund fee award is
United States District Court
Northern District of California
11
unavailable where, as here, the Court awards statutory fees. ECF No. 144 at 25-27 (citing Haggart
12
v. Woodley, 809 F.3d 1336 (Fed. Cir. 2016); Pierce v. Visteon Corp., 791 F.3d 782 (7th Cir.
13
2015); Brytus v. Spang & Co., 203 F.3d 238 (3d Cir. 2000)). However, Defendants also recognize
14
that the Ninth Circuit has not so held. Id. at 25. To the contrary, the Ninth Circuit has held that,
15
“unless Congress has forbidden the application of the common fund doctrine in cases in which
16
attorneys could potentially recover fees under the type of fee-shifting statutes at issue here, the
17
courts retain their equitable power to award common fund attorneys’ fees.” Staton v. Boeing Co.,
18
327 F.3d 938, 968 (9th Cir. 2003). “[T]here is no preclusion on recovery of common fund fees
19
where a fee-shifting statute applies,” id., and “common fund fees can be awarded where statutory
20
fees are available,” id. at 967. See also In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935,
21
941 (9th Cir. 2011) (“The award of attorneys’ fees in a class action settlement is often justified by
22
the common fund or statutory fee-shifting exceptions to the American Rule, and sometimes by
23
both.” (emphasis added)).
24
Defendants do not argue that ERISA forbids common fund awards such that Staton does
25
not apply. They assert that, “[a]t most, Staton stands for the proposition that Plaintiffs’ counsel
26
may be awarded by the Court either a statutory fee award or a common fund award, but not both.”
27
ECF No. 144 at 28. But they cite no cases construing Staton in this manner, and courts in this
28
circuit have held otherwise. E.g., Sobel v. Hertz Corp., 53 F. Supp. 3d 1319 (D. Nev. 2014)
13
1
(“Plaintiffs may seek additional attorney’s fees out of the common fund irrespective of their
2
entitlement to attorney’s fees under the fee-shifting statute.”); Briggs v. United States, No. C 07-
3
05760 WHA, 2010 WL 1759457, at *8 (N.D. Cal. Apr. 30, 2010) (finding “no bar to awarding
4
fees both under the [Equal Access to Justice Act, a fee-shifting statute] and from the common
5
fund”). This Court likewise concludes that class counsel may be awarded fees from the common
6
fund in addition to any award under ERISA’s fee-shifting statute.
7
A.
8
The Court first considers Plaintiffs’ claim for statutory fees. ERISA provides that “[a]
9
Statutory Fees and Costs
court in its discretion may allow a reasonable attorney’s fee and costs of action to either party.”
29 U.S.C § 1132(g)(1). Defendants do not dispute Plaintiffs’ entitlement to a statutory fee award,
11
United States District Court
Northern District of California
10
but they do argue that the amount of fees and costs claimed by class counsel must be reduced.
12
ECF No. 144 at 5.
13
The Ninth Circuit has explained:
21
To calculate attorney’s fees awarded under § 1132(g)(1), district
courts utilize a two-step hybrid lodestar/multiplier approach. First,
the court establishes a lodestar by multiplying the number of hours
reasonably expended on the litigation by a reasonable hourly rate.
The party seeking fees bears the burden of documenting the hours
expended in the litigation and must submit evidence supporting
those hours and the rates claimed. In determining the appropriate
lodestar amount, the district court may exclude from the fee request
any hours that are excessive, redundant, or otherwise unnecessary.
In addition to setting the number of hours, the court must also
determine a reasonable hourly rate, considering the experience, skill,
and reputation of the attorney requesting fees. Second, in rare and
exceptional cases, the district court may adjust the lodestar upward
or downward using a multiplier based on facts not subsumed in the
initial lodestar calculation.
22
Welch v. Metro. Life Ins. Co., 480 F.3d 942, 945-46 (9th Cir. 2007) (internal quotation marks and
23
citations omitted).
14
15
16
17
18
19
20
24
Class counsel originally calculated the lodestar, including projected future hours, at
25
$1,731,185.75. ECF No. 134 at 23. Their November 9, 2017 updated report calculated the
26
lodestar at $1,806,471.00. ECF No. 164 at 4. Counsel request a multiplier of 1.25, ECF No. 134
27
at 27-29, yielding a requested enhanced lodestar of $2,258,088.75.
28
In addition, class counsel originally requested $307,518.87 in costs: $73,972.93, including
14
1
an estimated $14,794.58 in future expenses, for counsel; and $233,545.94, including an estimated
2
$80,000 in future expenses, for the settlement administrator. Id. at 30. They now seek
3
$343,841.39 in costs: $73,425.20 for counsel and $270,416.19 for the settlement administrator.
4
ECF No. 164 at 3. The settlement administrator estimates that it will incur another $29,000 in
5
expenses through initial distribution, ECF No. 164-5 ¶ 4, bringing the estimated costs for the
6
settlement administrator to $299,416.19, and the total costs to $372,841.39.
1.
7
Hourly Rates
The reasonable hourly rate must be based on the “experience, skill, and reputation of the
8
attorney requesting fees.” Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986),
10
amended, 808 F.2d 1373 (9th Cir. 1987). Setting this rate is inherently difficult. Blum v. Stenson,
11
United States District Court
Northern District of California
9
465 U.S. 886, 895 n.11 (1984). To determine a reasonable hourly rate, the court looks to “the rate
12
prevailing in the community for similar work performed by attorneys of comparable skill,
13
experience, and reputation.” Chalmers, 796 F.2d at 1210-11. The relevant community is typically
14
the forum community. Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895, 906 (9th Cir.
15
1995). To inform and assist the Court in making this assessment, “the burden is on the fee
16
applicant to produce satisfactory evidence ‒ in addition to the attorney’s own affidavits ‒ that the
17
requested rates are in line with those prevailing in the community.” Blum, 465 U.S. at 895 n.11.
18
An attorney’s own declaration about the reasonableness of the claimed rate is itself insufficient to
19
meet the plaintiffs’ burden. Jordan v. Multnomah Cty., 815 F.2d 1258, 1263 (9th Cir. 1987).
20
Declarations by attorneys regarding the prevailing market rate in the community can suffice to
21
establish a reasonable hourly rate. Widrig v. Apfel, 140 F.3d 1207, 1209 (9th Cir. 1989); see, e.g.,
22
Welch, 480 F. 3d at 947 (considering “declarations from comparable ERISA lawyers attesting” to
23
market rate). Courts have the discretion to reduce the hourly rate for tasks that less skilled persons
24
could have performed. Ferland v. Conrad Credit Corp., 244 F. 3d 1145, 1148 (9th Cir. 2001).
Plaintiffs claim hourly rates of $200 to $875 for attorneys, and $125 and $350 for
25
26
paralegals, as follows:
27
///
28
///
15
1
Timekeeper
Admitted to Bar
Hourly Rate
Judy Spanier
1978
$875
Geoffrey V. White
1975
$700
Bill Frumkin
1987
$700
Nancy Kaboolian
1989
$700
Tom Sinclair
1999
$625
Natalie Marcus
2004
$540
Elizabeth Hunter
2005
$500
Lee Fernon
2011
$250
Alexandra Manfredi
2011
$200
12
Jenna Beirlein
2014
$200
13
Yvonne Gadsen
Paralegal
$350
14
Claudette Fowler
Paralegal
$125
2
3
4
5
6
7
8
9
10
United States District Court
Northern District of California
11
15
ECF No. 134 at 23; ECF No. 134-2 ¶ 29; ECF No. 134-3 ¶¶ 2, 8, 10; ECF No. 134-4 at 17-19, 21;
16
ECF No. 134-5 ¶ 2.
17
Defendants argue that the rates for Ms. Spanier, Mr. White, Mr. Frumkin, and
18
Ms. Kaboolian should be reduced to $675, and that Ms. Gadsen’s rate should be reduced to $125.
19
ECF No. 144 at 13-16. Defendants do not contest the other claimed hourly rates, and the Court
20
agrees that those rates are reasonable.
21
As to the claimed rates for Ms. Spanier, Mr. White, Mr. Frumkin, and Ms. Kaboolian,
22
Defendants argue that the analysis should be limited to prevailing rates in the Northern District of
23
California. The Court agrees. Although Plaintiffs cite to cases outside of this district that have
24
considered a national market for ERISA attorneys rather than limiting their analysis to the local
25
market, ECF No. 134 at 18-19, the Ninth Circuit has explained that “the relevant community [for
26
purposes of determining reasonable hourly rates] is the forum in which the district court sits.”
27
Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). Rates outside this district “may be used ‘if
28
local counsel was unavailable, either because they are unwilling or unable to perform because they
16
1
lack the degree of experience, expertise, or specialization required to handle properly the case.’”
2
Id. (quoting Gates v. Deukmejian, 987 F.2d 1392, 1405 (9th Cir. 1992)). Plaintiffs have not
3
established that this exception applies in this case, where one counsel – Mr. White – was local; the
4
declaration of Glenn Kantor indicates that other ERISA lawyers practice in this district, ECF No.
5
134-3 ¶¶ 5, 9; and there is no evidence that Mr. Kantor or other local counsel were unavailable. In
6
addition, both this Court and other courts in this district have considered the Northern District or
7
the San Francisco Bay Area as the relevant market when analyzing fees motions in ERISA cases.
8
E.g., Stewart v. Applied Materials, Inc., No. 15-cv-02632-JST, 2017 WL 3670711, at *10 (N.D.
9
Cal. Aug. 25, 2017) (“The declarations that the plaintiff has submitted sufficiently establish that
$700 per hour for Mr. Kassan and Mr. Glenn Kantor and $400 per hour for Mr. Rozell and
11
United States District Court
Northern District of California
10
Mr. Andrew Kantor reflect the prevailing rates in the Northern District for comparable work.”
12
(emphasis added)); Echague v. Metro. Life Ins. Co., 69 F. Supp. 3d 990, 997 (N.D. Cal. 2014)
13
(noting “testimony from ERISA specialists that $650 an hour is consistent with the prevailing
14
rates for ERISA litigation specialists in the San Francisco Bay Area” (emphasis added)). The
15
Court therefore does not consider evidence of hourly rates charged outside of this area.
16
The declaration of Mr. Kantor, ECF No. 134-3, is sufficient to establish that the $700
17
hourly rate claimed by Mr. White, an attorney with 42 years of experience, is reasonable.
18
Likewise, this Court recently awarded Mr. Kantor, an attorney with 31 years of experience, a $700
19
hourly rate. Stewart, 2017 WL 3670711, at *10. Mr. Frumkin, Ms. Kaboolian, and Ms. Spanier
20
have between 28 and 39 years of experience, which is within the same range of experience as
21
Mr. Kantor and Mr. White. Accordingly, the Court finds $700 to be a reasonable hourly rate for
22
these three attorneys as well.
23
Plaintiffs submit no evidence to establish that $350 is a reasonable hourly rate for
24
Ms. Gadsen’s paralegal work, and the record is silent as to her amount of experience. Given the
25
claimed associate rates of $200 per hour, and Ms. Fowler’s paralegal rate of $125 per hour, the
26
Court reduces Ms. Gadsen’s hourly rate to $125.
27
Ms. Spanier claims a total of 336.75 hours. ECF Nos. 134-4 at 21 (254.75 hours), 164-1
28
17
1
¶ 3 (33.75 hours), 178 ¶ 2 (48.25 hours).7 Ms. Gadsen claims 36.75 hours. ECF 134-4 at 21. The
2
reduction in hourly rates therefore results in a reduction in the lodestar of $67,200.
2.
3
Hours
4
Class counsel originally reported that they “have spent a total of 2,531.15 hours working
5
on this case, plus an estimated 350 hours that will be required for future work.” ECF No. 134 at
6
23. Their final claimed number of hours is 2,997.80. ECF No. 164 at 4. Defendants raise several
7
objections to the number of hours claimed by class counsel.
8
a.
Overstaffing/Duplicative Work
First, Defendants contend that the number of attorneys on this matter resulted in
10
overstaffing and duplicative work. A court may reduce the number of hours claimed by counsel
11
United States District Court
Northern District of California
9
“if the case was overstaffed and hours are duplicated [or] if the hours expended are deemed
12
excessive or otherwise unnecessary.” Chalmers, 796 F.2d at 1210. Defendants identify “783.2
13
hours billed by Class Counsel as to which there is a high likelihood that they engaged in
14
duplicative work, most notably for correspondence and conferences among several various
15
attorneys working on this matter, as well as attendance by multiple attorneys at court
16
proceedings.” ECF No. 144 at 16-17. These hours result in claimed fees of $513,396.25. ECF
17
No. 144-6 at 49. Plaintiffs do not dispute that the specific billing entries identified by Defendants
18
indicate potentially duplicative work or intra- and inter-office communications. Instead, they
19
counter that the four firms representing Plaintiffs “worked together and coordinated efforts in the
20
most efficient possible manner.” ECF No. 153 at 15; see also ECF No. 153-1 ¶ 11 (“At
21
Defendants’ request, the four firms working as Plaintiffs’ counsel worked together in coordinated
22
efforts in the most efficient manner possible, beginning immediately after the filing of the
23
consolidated complaint. Those efforts included assignments of tasks, regular meetings in which to
24
share workloads, and delegating duties from discovery to drafting pleadings.”).
25
7
26
27
28
Curiously, Ms. Spanier’s December 13, 2017 declaration claims a total of $42,218.75 for 48.25
hours spent by her firm between July 28 and September 14, 2017. ECF No. 178 at 5. Her
September 15, 2017 declaration claimed $38,718.75 – $3,500 less – for the same number of hours
in the same period. ECF No. 153-2 at 2. The Court does not resolve this discrepancy and
presumes the subsequent declaration accurately reports the number of hours claimed by
Ms. Spanier.
18
The Court is not persuaded by Plaintiffs’ summary declaration. For example, five counsel
1
2
billed for attending a mediation on May 25, 2016. ECF No. 144-6 at 30. Putting aside the
3
inconsistencies in the number of hours billed per attorney – ranging from 9.2 to 11.1 hours ‒
4
counsel have not explained why so many attorneys needed to attend the mediation. In the cases
5
cited by Plaintiffs, ECF No. 153 at 16 n.10, courts found it reasonable for two attorneys to attend a
6
mediation, and in one of those cases, the court explained that the two attorneys “brought different
7
things to the table,” with one bringing “mediation experience” and the other “an intimate
8
knowledge of the record.” Toven v. Metro. Life Ins. Co., No. CV06-07260 ABC (RZx), 2009 WL
9
578538, at *3 (C.D. Cal. Mar. 5, 2009); see also Gurasich v. IBM Ret. Plan, No. 14-cv-02911DMR, 2016 WL 3683044, at *11 (N.D. Cal. July 12, 2016); Banas v. Volcano Corp., 47 F. Supp.
11
United States District Court
Northern District of California
10
3d 957, 971 (N.D. Cal. 2014). Here, there is no similar justification for having five partners attend
12
the mediation, and the Court finds the requested hours to be unreasonable. The Court will allow
13
time for two partners to have attended the mediation and will therefore reduce the claimed hours
14
by 60%. At the $700 billing rate charged by four of the five partners, this results in a reduction to
15
the lodestar of $21,546.
Likewise, four counsel billed for attending a December 10, 2015 motion hearing, for a total
16
17
claimed fee of $2,850.8 ECF No. 144-6 at 20. This was also excessive, and the Court will reduce
18
the claimed amount by half, for a reduction of $1,425 to the lodestar.
On the Court’s own review, the majority of the remaining 725.6 hours identified by
19
20
Defendants refer to intra- and inter-office communications by telephone or email. While,
21
particularly in a large class action such as this, “some number of intra-office conferences are not
22
only to be expected, but will often result in a savings of attorney time by ensuring that all
23
attorneys on a team are kept apprised of important information about the case as it becomes
24
available,” the amount of such communications in this case was excessive. MacDonald v. Ford
25
Motor Co., No. 13-cv-02988-JST, 2016 WL 3055643, at *4 (N.D. Cal. May 31, 2016). In
26
8
27
28
Three of the four attorneys included travel time in their billing entries. The attorney who did not
billed 1.5 hours for “ORAL ARGUMENT,” ECF No. 144-6 at 20, and the Court therefore
calculates the total fee based on 1.5 hours for all four attorneys.
19
1
MacDonald, for example, the amount billed for intraoffice communication was “approximately
2
7% of the overall billing.” Id. Here, by contrast, the identified 725.6 hours represent nearly 25%
3
of the total number of hours claimed by counsel. “[W]hen faced with a massive fee application
4
the district court has the authority to make across-the-board percentage cuts either in the number
5
of hours claimed or in the final lodestar figure ‘as a practical means of trimming the fat from a fee
6
application.’” Gates, 987 F.2d at 1399 (9th Cir. 1992) (citation omitted). Here, rather than
7
examine individually the 48 pages of billing entries identified by Defendants as duplicative, ECF
8
No. 144-6, the Court finds it reasonable to reduce the claimed 725.6 hours by 50%. See, e.g., Carr
9
v. Tadin, Inc., 51 F. Supp. 3d 970, 983 (S.D. Cal. 2014) (reducing lodestar by “approximately half
of the hours billed for intraoffice e-mails, e-mails from ECF, and 6-minute meetings concerning
11
United States District Court
Northern District of California
10
the case’s ‘strategy’ or ‘status’”). This results in a reduction to the lodestar of $237,063.12.9
12
b.
Block Billing
Defendants next request a 20% reduction in the hours claimed by the lawyers at Abbey
13
14
Spanier, LLP and the Law Office of Geoffrey V. White because they contend that these lawyers
15
engaged in impermissible block billing. ECF No. 144 at 17-18. While Defendants are correct that
16
attorneys at these firms did not separate time entries per day by task and instead billed all tasks for
17
each day in a single entry, see ECF No. 134-4 at 23-37 (Abbey Spanier, LLP); ECF No. 134-5 at
18
16-44 (Law Office of Geoffrey V. White), they have not identified any instances where such block
19
billing makes it impossible for “the Court to determine the reasonableness of time expended.”
20
Garcia v. Resurgent Capital Servs., L.P., No. C-11-1253 EMC, 2012 WL 3778852, at *8 (N.D.
21
Cal. Aug. 30, 2012) (imposing no reduction for block-billed entries). The requested reduction is
22
therefore denied.
In a footnote, Defendants argue that time billed by Abbey Spanier, LLP should be reduced
23
24
by 20% because the firm billed in quarter-hour, rather than tenth-of-an-hour, increments. ECF No.
25
144 at 17 n.5. The Ninth Circuit approved such a reduction where “hours were inflated because
26
27
28
9
The five entries for attendance at the May 25, 2016 mediation total $36,420. Deducting this
amount, and the $2,850 claimed for attendance at the December 10, 2015 motion hearing, from
$513,396.25 yields $474,126.25, half of which is $237,063.12.
20
1
counsel billed a minimum of 15 minutes for numerous phone calls and e-mails that likely took a
2
fraction of the time.” Welch, 480 F.3d at 949. Here, however, Defendants have not identified any
3
time entries where quarter-hour billing resulted in an inflation of hours. Consequently, this
4
request is also denied.
5
6
c.
Time Entries of 0.1 Hour
Defendants criticize other of Plaintiffs’ counsel for billing in 0.1-hour increments for
7
incremental tasks. ECF No. 144 at 19. They identify 27.2 hours billed in this manner, for a total
8
of $15,577.50. ECF No. 144-10 at 14. “Although ‘a one-tenth hour timekeeping practice is
9
generally reasonable’ and ‘careful review of filings should be encouraged,’ billing 0.1 hours for
certain practices sometimes requires a reduction. Kalani v. Starbucks Corp., 2016 WL 379623, at
11
United States District Court
Northern District of California
10
*8 (N.D. Cal. Feb. 1, 2016) (reducing by half multiple 0.1 hour time entries for routine docket
12
entries).” Jacobson v. Persolve, LLC, No. 14-cv-00735-LHK, 2016 WL 7230873, at *10 (N.D.
13
Cal. Dec. 14, 2016). In addition, courts in this district are “critical of the practice of billing for
14
multiple .1 hour entries separately where they could be consolidated.” Hernandez v. Taqueria El
15
Grullense, No. 12-cv-03257-WHO, 2014 WL 1724356, at *9 (N.D. Cal. Apr. 30, 2014).
16
Defendants point only to two specific days on which Thomas Sinclair included four
17
0.1-hour time entries, each of which referenced review of routine court filings. ECF No. 144 at 19
18
(citing time entries on February 19, 2015, and May 19, 2015). The Court agrees that billing 24
19
minutes for such work is excessive and reduces the amount billed by half. This results in a
20
reduction to the lodestar of $250. The Court’s review of the other entries identified by Defendants
21
reveals that the vast majority do not include multiple 0.1-hour entries by the same attorney on the
22
same date, and such entries could not have been consolidated. Accordingly, the Court does not
23
apply any further reductions to the lodestar for 0.1-hour billing entries.
24
25
26
27
28
d.
Time Spent on Particular Activities
The Court turns next to several specific categories of time on which Defendants contend
Plaintiffs spent an unreasonable number of hours.
i.
Amended Stipulation
First, Defendants argue that it was unreasonable for Plaintiffs to have spent 244.85 hours,
21
1
for a fee of $164,156.25, on negotiating the first amended stipulation of settlement over a two-
2
month period. ECF No. 144 at 14. They do not, however, identify any particular time entries as
3
unreasonable, nor do they provide any justification for applying their requested 65% lodestar
4
reduction. The Court’s independent review of the time entries identified by Defendants, ECF No.
5
144-7, also reveals no obviously unreasonable time entries aside from excessive intra- and
6
interoffice communications. The Court has already reduced the lodestar for these excessive hours
7
and does not find any further reductions to be appropriate.
8
ii.
Travel Time
Next, Defendants challenge billing for approximately 100 hours, for a fee of $68,934.61,
9
for time spent traveling. ECF No. 144 at 18 & n.6. “While the Court may in its discretion reduce
11
United States District Court
Northern District of California
10
the fees owed related to travel, the Court may also award travel time in full. The central inquiry is
12
whether the time sought is reasonable.” Transbay Auto Serv., Inc. v. Chevron U.S.A., Inc.,
13
No. C09-04932 SI, 2013 WL 843036, at *7 (N.D. Cal. Mar. 6, 2013) (citation omitted).
14
The Court has already found unreasonable the attendance of four attorneys at the
15
December 10, 2015 motion hearing and five attorneys at the May 25, 2016 mediation. The
16
corresponding travel time is also unreasonable, and the Court will disallow the time spent on out-
17
of-town travel by two attorneys for both of these events: travel by Ms. Spanier and Mr. Sinclair for
18
the motion hearing in San Francisco, and travel by Mr. White and Mr. Sinclair for the mediation in
19
New York City. This results in a reduction to the lodestar of $32,200. ECF No. 144-9 at 2.10
20
iii.
Claims Management
Defendants also argue that class counsel’s claimed time for managing class members’
21
22
claims ‒ 100.65 billed hours and 125 anticipated future hours, for a total fee of $126,976.25 ‒ is
23
excessive and unreasonable. ECF No. 144 at 19. They ask the Court to reduce this amount by
24
25% because some of these tasks should have been performed by the separately compensated
25
26
27
28
10
The Court has already reduced Ms. Spanier’s hourly rate to $700 from $875 and therefore
calculates her travel at the reduced rate. Also, Mr. Sinclair block-billed 2.5 hours for travel time
and attendance at the December motion hearing. The Court already considered the 1.5 hours spent
at the hearing and only counts as travel time 1.0 hours of Mr. Sinclair’s December 10, 2015 billing
entry.
22
1
settlement administrator. Id. at 19-20. However, Defendants cite no authority for the proposition
2
that class counsel cannot recover fees for such tasks as communicating with the settlement
3
administrator or responding to inquiries from class members. To the contrary, the Court expects
4
that at least some communication of this kind will customarily take place as part of class counsel’s
5
representation. Moreover, the Court is satisfied by its review of the time entries identified by
6
Defendants, ECF No. 144-11, that the claimed time is reasonable, and no reduction to the lodestar
7
is appropriate.
3.
8
9
10
United States District Court
Northern District of California
11
Lodestar Summary
Incorporating all of the above reductions, the lodestar is reduced from $1,806,471.00 to
$1,446,786.88.
4.
Multiplier or Reduction
12
Plaintiffs request a lodestar multiplier of 1.25, ECF No. 134 at 26-29, and Defendants
13
argue that the lodestar should be reduced based on their characterization of Plaintiffs’ limited
14
success, ECF No. 144 at 8-13. An adjustment to the lodestar is appropriate only in “rare and
15
exceptional cases, . . . based on facts not subsumed in the initial lodestar calculation.” Welch, 480
16
F.3d at 946. “Factors that cannot serve as independent bases for adjusting fee awards are: (1) the
17
novelty and complexity of the issues, (2) the special skill and experience of counsel, (3) the quality
18
of representation, and (4) the results obtained.” Miller v. Los Angeles Cty. Bd. of Educ., 827 F.2d
19
617, 621 n.4 (9th Cir. 1987) (citing Blum, 465 U.S. at 898-900; Jordan, 815 F.2d at 1262 n.6). In
20
addition, a statutory fee award under ERISA cannot be enhanced based on the fees’ contingent
21
nature. Cann v. Carpenters’ Pension Tr. Fund for N. Cal., 989 F.2d 313, 317-18 (9th Cir. 1993).
22
Application of a multiplier must be “supported by both specific evidence on the record and
23
detailed findings . . . that the lodestar amount is unreasonably low or unreasonably high.” Van
24
Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000) (internal quotation
25
marks and citations omitted).
26
The Court cannot make such findings here. Class counsel’s arguments regarding the time
27
spent litigating this case, including their characterization of the claims as “novel and difficult,”
28
ECF No. 134 at 27, are already “subsumed in the initial lodestar calculation.” Welch, 480 F.3d at
23
1
946; see also Miller, 827 F.2d at 621 n.4. The Court also disagrees with Defendants’
2
characterization of Plaintiffs’ success as so limited as to require a lodestar reduction. The factor
3
exerting the greatest downward pressure on the class’ recovery was the Fund’s financial condition,
4
not the strength of Plaintiffs’ legal arguments or the quality of their advocacy. Moreover,
5
although Plaintiffs did not obtain all of the results they sought in this litigation, the Court has
6
already found the settlement terms to be fair, reasonable, and adequate. The Court finds neither an
7
upward nor a downward multiplier to be appropriate.
8
9
5.
Costs
Regarding costs, class counsel initially provided only “categories of expenses incurred and
the total amounts paid,” which is insufficient to allow a court to determine the reasonableness of
11
United States District Court
Northern District of California
10
claimed expenses. Wren v. RGIS Inventory Specialists, No. C-06-05778 JCS, 2011 WL 1230826,
12
at *30 (N.D. Cal. Apr. 1, 2011). Pursuant to the Court’s order, ECF No. 162, Plaintiffs filed
13
supplemental documentation of their claimed costs, ECF Nos. 164, 164-1 to 164-5. The Court
14
finds this supplemental documentation, along with the additional declaration filed by Mr. Sinclair
15
at ECF No. 179, to be sufficient.
16
Defendants argued in their opposition that Plaintiffs are entitled only to costs that are
17
taxable under 28 U.S.C. § 1920 as part of the statutory fee award. ECF No. 144 at 23-24.
18
However, they conceded this argument at the fairness hearing. Although “costs of action” in 29
19
U.S.C. § 1132(g)(1) refers only to taxable costs, Agredano v. Mut. of Omaha Cos., 75 F.3d 541,
20
544 (9th Cir. 1996), non-taxable costs are recoverable as part of the “reasonable attorney’s fee”
21
when “it is the prevailing practice in a given community for lawyers to bill those costs separately
22
from their hourly rates,” Trustees of Const. Indus. & Laborers Health & Welfare Tr. v. Redland
23
Ins. Co., 460 F.3d 1253, 1258 (9th Cir. 2006) (internal quotation marks and citation omitted).
24
Defendants now contest only two categories of costs claimed by Plaintiffs: expert witness
25
fees and the expenses of the settlement administrator. Defendants cite Agredano as barring the
26
recovery of expert witness fees, but that case holds only that such fees are not recoverable as
27
taxable costs under 28 U.S.C. § 1920. Nonetheless, “‘reasonable attorney’s fees’ do not include
28
costs that, like expert fees, have by tradition and statute been treated as a category of expenses
24
1
distinct from attorney’s fees.” Redland Ins. Co., 460 F.3d at 1258; see also Bd. of Trustees v.
2
Piedmont Lumber & Mill Co., No. 13-cv-03898-HSG, 2016 WL 4446993, at *3 (N.D. Cal.
3
Aug. 24, 2016) (“The Court finds that the requested expenses are reasonable and recoverable,
4
except for the expert witness fees, which are not compensable in an ERISA case.”). Plaintiffs cite
5
only one case, which did not arise under ERISA, in which the court awarded expert fees. ECF No.
6
134 at 30. That case’s discussion on costs reads, in its entirety:
7
8
9
10
United States District Court
Northern District of California
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Class counsel seek to recover the costs of litigation as well as their
fees. They request nearly $200,000 in expert and mediation fees as
well as $81,390.38 in general litigation costs. It appears to the Court
that the costs requested are reasonable in light of the complexity of
the litigation and the number of counsel involved, and are therefore
approved by the Court.
Linney v. Cellular Alaska P’ship, No. C-96-3008 DLJ, 1997 WL 450064, at *7 (N.D. Cal. July 18,
1997). The Court does not find this case persuasive in light of its cursory discussion and the more
recent and ERISA-specific authority cited above. The other three cases cited by Plaintiffs, ECF
No. 153 at 19-20, support an award of non-taxable costs as part of a reasonable attorneys’ fee, but
expert fees were not awarded – or addressed – in any of those cases. Redland Ins. Co., 460 F.3d at
1258-59 (allowing recovery in ERISA case of “reasonable charges for computerized research”);
Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3d 577 (9th Cir. 2010) (holding that Fair Credit
Reporting Act allows non-taxable costs, and remanding to district court to consider whether to
award claimed non-taxable costs, which included “the cost of postage, facsimiles, travel,
mediation services, and video conferencing services used in depositions”); Langston v. N. Am.
Asset Dev. Corp. Grp. Disability Plan, No. C 08-02560 SI, 2010 WL 330085, at *8 & n.12 (N.D.
Cal. Jan. 20, 2010), on reconsideration, 2010 WL 1460201 (N.D. Cal. Apr. 12, 2010) (awarding
“money spent on Westlaw and PACER fees, faxing/copying/scanning, and postage” but noting
that the plaintiffs had withdrawn their request for $600 in expert fees). Accordingly, the Court
denies Plaintiffs’ request for $13,982.05 in expert fees. ECF No. 164 at 3.
None of the cases cited by either party considers whether the expenses of a settlement
administrator should be included as part of a “reasonable attorneys’ fee,” and the Court is aware of
no authority that has reached this question. However, courts, including this one, have awarded
25
1
settlement administrator expenses as part of “litigation costs.” E.g., Deatrick v. Securitas Sec.
2
Servs. USA, Inc., No. 13-cv-05016-JST, 2016 WL 5394016, at *7 (N.D. Cal. Sept. 27, 2016). In
3
addition, the terms of the settlement agreement explicitly allow for recovery of such expenses:
4
“Class counsel may apply to the Court no later than fifty-six (56) days prior to the Fairness
5
Hearing for an award of attorneys’ fees and expenses, including for the Settlement Administrator’s
6
fees and expenses.” ECF No. 125 at 40. The Court therefore denies Defendants’ request to strike
7
the settlement administrator’s expenses from Plaintiffs’ fee award.
Finally, the Court reduces the amount of costs Plaintiffs claim for travel. The Court has
8
9
already found unreasonable the time claimed by Ms. Spanier and Mr. Sinclair for the
December 10, 2015 motion hearing, and by Mr. White and Mr. Sinclair for the May 25, 2016
11
United States District Court
Northern District of California
10
mediation, and the Court therefore does not award related travel expenses. These expenses total
12
$7,480.47. ECF No. 164-1 at 46-47, 49 (Spanier); ECF No. 164-3 at 4, 10, 13, 17 (White); ECF
13
No. 164-4 at 67-69, 76-80 (Sinclair). In addition, Mr. Sinclair flew first or business class on two
14
other trips, ECF No. 179 ¶ 2, and those expenses, totaling $3,225.30, will also be disallowed as
15
unreasonable.11 ECF No. 164-4 at 70-71, 81-84. As a result, Plaintiffs’ award of costs is reduced
16
by $10,705.77.
17
In sum, the Court reduces Plaintiffs’ requested award of costs from $372,841.39 to
18
$348,153.57. This includes the settlement administrator’s estimated $29,000 in costs through the
19
initial distribution, ECF No. 164-5 ¶ 4, so the actual amount of costs paid by Defendants may
20
vary.
21
B.
Common Fund
22
Plaintiffs in this case request an additional fee award out of the common fund. “Where a
23
settlement produces a common fund for the benefit of the entire class,” as here, “courts have
24
discretion to employ either the lodestar method or the percentage-of-recovery method” to
25
determine the reasonableness of attorneys’ fees. In re Bluetooth, 654 F.3d at 942. “Because the
26
27
28
11
This amount includes the $661.80 that Mr. Sinclair agreed was non-reimbursable because he
received a refund for a canceled flight. ECF No. 179 ¶ 3. He did not do so until after the Court
inquired about a potentially duplicative claim. ECF No. 177 at 1.
26
1
benefit to the class is easily quantified in common-fund settlements,” the Ninth Circuit permits
2
district courts “to award attorneys a percentage of the common fund in lieu of the often more time-
3
consuming task of calculating the lodestar.” Id. “Applying this calculation method, courts [in the
4
Ninth Circuit] typically calculate 25% of the fund as the ‘benchmark’ for a reasonable fee award,
5
providing adequate explanation in the record of any ‘special circumstances’ justifying a
6
departure.” Id. (citing Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1311
7
(9th Cir. 1990)). However, the benchmark should be adjusted when the percentage recovery
8
would be “either too small or too large in light of the hours devoted to the case or other relevant
9
factors.” Six (6) Mexican Workers, 904 F.2d at 1311. When considering whether to depart from
the 25% benchmark, courts consider a number of factors, including whether class counsel
11
United States District Court
Northern District of California
10
“‘achieved exceptional results for the class,’ whether the case was risky for class counsel, whether
12
counsel’s performance ‘generated benefits beyond the cash settlement fund,’ the market rate for
13
the particular field of law (in some circumstances), the burdens class counsel experienced while
14
litigating the case (e.g., cost, duration, foregoing other work), and whether the case was handled
15
on a contingency basis.” In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 954-55 (9th Cir.
16
2015) (quoting Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047-50 (9th Cir. 2002)). “[T]he
17
most critical factor [in determining appropriate attorneys’ fee awards] is the degree of success
18
obtained.” Hensley v. Eckerhart, 461 U.S. 424, 436 (1983).
19
Comparing a percentage fee award to the lodestar “provides a check on the reasonableness
20
of the percentage award.” Vizcaino, 290 F.3d at 1050. Percentage awards in the range of one to
21
four times the lodestar are common. Id. at 1051 n.6 (finding a range of 0.6 to 19.6 in a survey of
22
24 cases, with 83% in the range of 1.0 to 4.0 and 54% in the 1.5 to 3.0 range, and citing In re
23
Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 341 (3d Cir. 1998)
24
(“[M]ultiples ranging from one to four are frequently awarded in common fund cases when the
25
lodestar method is applied.” (quoting 3 Newberg § 14.03 at 14-15))). “[W]here awarding 25% of
26
a ‘megafund’ would yield windfall profits for class counsel in light of the hours spent on the case,
27
courts should adjust the benchmark percentage or employ the lodestar method instead.” In re
28
Bluetooth, 654 F.3d at 942.
27
1.
1
Amount of Common Fund
The parties dispute the amount that should be used as the basis for calculating a percentage
2
3
fee award. Plaintiffs believe that the fee award “should be based on the totality of funds made
4
available for the benefit of the class, regardless of whether class members file claims.”12 ECF No.
5
164 at 4. They consider the value of the fund to be the $12,168,789.21 figure contained in
6
Defendants’ CAFA notice. Id. at 3. Defendants argue that this amount was merely an estimate,
7
and that any fee award should be based on the actual value of the common fund. ECF No. 170.
The Court agrees with Defendants. As Defendants correctly observe, “this is not a
8
settlement in which the parties bargained in advance for a common fund under the agreement or
10
set a maximum liability for the Pension Fund. Rather, the common fund . . . is precisely the sum
11
United States District Court
Northern District of California
9
total of the amount actually deposited by the Pension Fund under the settlement formula.” Id. at 2
12
n.1 (emphasis in original). That is, a common fund of $12,168,789.21 never existed; instead, the
13
settlement agreement requires Defendants to pay into the common fund only those amounts due to
14
class members under the terms of the agreement, and the final value of the fund could have been
15
higher or lower than the estimate contained in the CAFA notice.13 ECF No. 125 at 36-37. This
16
characteristic distinguishes this case from the cases cited by Plaintiffs in which defendants’
17
potential liability was fixed at a set amount. See Boeing v. Van Gemert, 444 U.S. 472, 479 & n.5
18
(1980) (judgment to the class was for “a sum certain”: a “fixed recovery” that was not “contingent
19
upon the presentation of individual claims”); Williams v. MGM-Pathe Commc’ns Co., 129 F.3d
20
1026, 1027 (9th Cir. 1997) (case involved a “$4.5 million settlement fund” and is further
21
distinguishable because, unlike in this case, the settlement agreement included a provision that
22
“the class attorneys would seek to recover fees based on the entire $4.5 million fund”); Lopez v.
23
Youngblood, No. CV-F-07-0474 (DLB), 2011 WL 10483569, at *2-3, *13 (E.D. Cal. Sept. 2,
24
2011) (settlement agreement included a cap on payouts to class members and, as a further
25
12
26
27
Plaintiffs raised this issue only in their supplemental report to the Court filed in response to the
Court’s order at the fairness hearing. The Court did not invite supplemental legal briefing but will
nonetheless consider the merits of Plaintiffs’ argument.
13
28
If the notice under- rather than over-estimated the class recovery, the Court strongly doubts that
Plaintiffs would have requested a percentage of the estimated recovery rather than the actual.
28
1
distinction from this case, a fixed attorneys’ fee award paid in addition to, rather than deducted
2
from, payments to class members). The Court will base the percentage fee award on the actual
3
value of the common fund: $10,225,006.20. ECF No. 174 at 2.
2.
4
Percentage Award
Plaintiffs’ counsel seeks a fee award of 33% of the common fund. As the Court previously
5
6
advised, it “is unlikely to ignore the Ninth Circuit’s instruction that only ‘special circumstances’
7
justify a departure” from the 25% benchmark. ECF No. 123 at 12 (quoting Six (6) Mexican
8
Workers, 904 F.2d at 1311). No such special circumstances are present here. Although the Court
9
finds the settlement fair and reasonable, the results in this case are not exceptional. Nor does the
Court find this litigation especially risky or complex. In addition, the three-year length of this
11
United States District Court
Northern District of California
10
litigation – and the resultant financial burden placed on Plaintiffs’ counsel by the contingent nature
12
of the fee award – was not unusually protracted. Notwithstanding the cases cited by Plaintiffs in
13
which courts have awarded 28-33.3% of the common fund as a fee award, ECF No. 134 at 15, the
14
Court is not persuaded that special circumstances warrant a departure from the 25% benchmark in
15
this case. Cf. Six (6) Mexican Workers, 904 F.2d at 1311 (finding no departure from the 25%
16
benchmark where “the litigation lasted more than 13 years, obtained substantial success, and
17
involved complicated legal and factual issues”).
Class counsel is entitled to 25% of the common fund, or $2,556,251.55, in attorneys’ fees.
18
19
Cross-checking this amount against the $1,446,786.88 lodestar the Court has already calculated
20
yields a multiplier of 1.77, which is within the range of reasonable common fund fee awards.
21
$1,446,786.88 will be paid by Defendants (or the Fund’s insurance policy) as statutory fees,
22
leaving $1,109,464.67 to come out of the common fund.
23
IV.
24
INCENTIVE AWARDS
Finally, Plaintiffs request incentive awards of $1,000 to each of the eleven named class
25
representatives. ECF No. 134 at 30-31. Incentive awards “are discretionary . . . and are intended
26
to compensate class representatives for work done on behalf of the class, to make up for financial
27
or reputational risk undertaken in bringing the action, and, sometimes, to recognize their
28
willingness to act as a private attorney general.” Rodriguez, 563 F.3d at 958-959 (internal citation
29
1
omitted). Courts evaluate incentive awards individually, “using relevant factors including the
2
actions the plaintiff has taken to protect the interests of the class, the degree to which the class has
3
benefited from those actions, the amount of time and effort the plaintiff expended in pursuing the
4
litigation and reasonable fears of workplace retaliation.” Staton, 327 F.3d at 977 (citation and
5
internal quotations and alterations omitted). Indeed, “courts must be vigilant in scrutinizing all
6
incentive awards to determine whether they destroy the adequacy of the class representatives.”
7
Radcliffe v. Experian Info. Solutions, Inc., 715 F.3d 1157, 1164 (9th Cir. 2013). “To determine
8
the reasonableness of an incentive payment, courts consider the proportionality between the
9
incentive payment and the range of class members’ settlement awards.” Dyer v. Wells Fargo
Bank, N.A., 303 F.R.D. 326, 335 (N.D. Cal. 2014). An award of $5,000 “is presumptively
11
United States District Court
Northern District of California
10
reasonable.” Id.
12
Plaintiffs argue that “the class representatives diligently kept informed of the litigation,
13
communicated with Class Counsel as necessary to assist with the effective prosecution of the case,
14
and provided documents and information, as needed.” ECF No. 134 at 31. Defendants do not
15
oppose the proposed $1,000 incentive awards, and no class member has objected to them. The
16
requested $1,000 is below the presumptively reasonable $5,000, and the requested awards in
17
aggregate represent less than 0.1% of the settlement fund. The Court finds the requested incentive
18
awards to be reasonable.
CONCLUSION
19
20
The Court grants final approval of the proposed settlement and grants in part and denies in
21
part Plaintiffs’ motion for attorneys’ fees, costs, and incentive awards. The Clerk shall enter
22
judgment and close the file.
23
24
25
26
IT IS SO ORDERED.
Dated: December 28, 2017
______________________________________
JON S. TIGAR
United States District Judge
27
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